BOISE CASCADE Co

The following tables set forth our operating results in dollars and as a percentage of sales for the years ended December 31, 2024 and 2023:

Sales Volumes and Prices

Set forth below are historical U.S. housing starts data, segment sales volumes and average net selling prices for the principal products sold by our Wood Products segment, and sales mix and gross margin information for our BMD segment for the years ended December 31, 2024 and 2023.

(a) Actual U.S. housing starts as reported by the U.S. Census Bureau.

(b) We define gross margin as "Sales" less "Materials, labor, and other operating expenses (excluding depreciation)." Substantially all costs included in "Materials, labor, and other operating expenses (excluding depreciation)" for our BMD segment are for inventory purchased for resale. Gross margin percentage is gross margin as a percentage of segment sales.

2024 Compared With 2023

Sales

For the year ended December 31, 2024, total sales decreased $114.0 million, or 2%, to $6,724.3 million from $6,838.2 million during the year ended December 31, 2023. As described below, the decrease in sales was driven by the changes in sales prices and volumes for the products we manufacture and distribute with single-family residential construction activity being the key demand driver for our sales. During 2024, total U.S. housing starts decreased 4%, while single-family housing starts increased 7%, compared with 2023. For the year ended December 31, 2024, average composite lumber and average composite panel prices were 3% lower and 1% higher, respectively, compared with 2023, as reflected by Random Lengths composite lumber and panel pricing.

Wood Products. During the year ended December 31, 2024, sales, including sales to our BMD segment, decreased $100.3 million, or 5%, to $1,832.3 million from $1,932.6 million in 2023. The decrease in sales was driven by lower sales prices of 7% for both LVL and I-joists (collectively referred to as EWP), resulting in decreased sales of $41.4 million and $32.4 million, respectively. Plywood sales volumes and sales prices both decreased 5%, resulting in decreased sales of $30.4 million and $25.4 million, respectively. Plywood sales volumes decreased as we shifted a higher proportion of our internally produced veneer into EWP production, due to increased demand for EWP. In addition, other sales, including lumber and residual byproducts, decreased $44.7 million. These decreases were offset partially by higher sales volumes for LVL and I-joists of 11% and 7%, respectively, resulting in increased sales of $59.7 million and $30.4 million, respectively.

Building Materials Distribution. During the year ended December 31, 2024, sales decreased $12.2 million, or less than 1%, to $6,166.5 million from $6,178.7 million in 2023. Compared with the prior year, the overall decrease in sales was driven by a sales price decrease of 3%, offset partially by a sales volume increase of 3%. Excluding the impact of the BROSCO acquisition on October 2, 2023, sales would have decreased by 2%. By product line, commodity sales decreased 5%, or $128.0 million, general line product sales increased 7%, or $172.3 million, and sales of EWP (substantially all of which is sourced through our Wood Products segment) decreased 4%, or $56.5 million.

Costs and Expenses

Materials, labor, and other operating expenses (excluding depreciation) decreased $15.7 million, or less than 1%, to $5,393.6 million for the year ended December 31, 2024, compared with $5,409.3 million during the prior year. In our Wood Products segment, materials, labor, and other operating expenses increased due to higher EWP sales volumes, higher costs of OSB (used in the manufacture of I-joists), and increased labor costs compared with 2023. Materials, labor, and other operating expenses as a percentage of sales (MLO rate) in our Wood Products segment increased by 480 basis points, due primarily to lower EWP and plywood sales prices. In BMD, the decrease in materials, labor, and other operating expenses was driven by lower purchased materials costs as a result of a decrease in product prices, offset partially by an increase in purchased materials costs due to the BROSCO acquisition. The BMD segment MLO rate decreased 30 basis points, driven by higher margin percentages on general line products, offset partially by lower margins on EWP compared with 2023.

Depreciation and amortization expense increased $11.6 million, or 9%, to $144.1 million for the year ended December 31, 2024, compared with $132.5 million during the prior year. The increase was due primarily to the BROSCO acquisition and other capital expenditures. These increases were offset partially by less accelerated depreciation recorded in 2024 than 2023 related to the indefinite curtailment of lumber production at our Chapman, Alabama facility.

Selling and distribution expenses, inclusive of the BROSCO acquisition, increased $35.4 million, or 6%, to $594.9 million for the year ended December 31, 2024, compared with $559.5 million for the prior year. The increase was due primarily to higher employee-related expenses of $21.9 million, offset partially by decreased incentive compensation expense of $6.6 million. Shipping and handling and occupancy costs both increased $2.5 million. In addition, costs related to professional fees, travel and entertainment, and advertising increased $5.4 million.

General and administrative expenses decreased $12.1 million, or 11%, to $102.3 million for the year ended December 31, 2024, compared with $114.4 million for the prior year. The decrease was primarily the result of lower incentive compensation of $9.5 million. In addition, we incurred $5.1 million of acquisition-related expenses in the prior year for the BROSCO acquisition. These decreases were offset partially by an increase in other employee-related expenses of $1.5 million.

Income From Operations

Income from operations decreased $134.3 million to $490.0 million for the year ended December 31, 2024, compared with $624.4 million for the year ended December 31, 2023.

Wood Products. For the year ended December 31, 2024, segment income decreased $105.7 million to $231.5 million from $337.1 million for the year ended December 31, 2023. The decrease in segment income was due primarily to lower EWP and plywood sales prices, as well as higher wood fiber and conversion costs. These decreases in segment income were offset partially by higher EWP sales volumes.

Building Materials Distribution. For the year ended December 31, 2024, segment income decreased $32.4 million to $303.4 million from $335.8 million for the year ended December 31, 2023. The decline in segment income was driven by increased selling and distribution expenses and depreciation and amortization expense of $37.4 million and $17.2 million, respectively. These decreases in segment income were offset partially by a gross margin increase of $15.1 million, resulting primarily from improved gross margins on general line products, offset partially by lower gross margins on EWP and commodity products. In addition, general and administrative expenses decreased $6.7 million, primarily due to $5.1 million of acquisition-related expenses in the prior year for the BROSCO acquisition.

Corporate. Unallocated corporate expenses decreased $3.8 million to $44.8 million for the year ended December 31, 2024, from $48.6 million for the year ended December 31, 2023. The decrease was due primarily to lower incentive compensation, offset partially by an increase in other employee-related expenses.

Other

Interest Income. Interest income decreased $9.0 million to $39.1 million for the year ended December 31, 2024, from $48.1 million for the year ended December 31, 2023. The decrease was due primarily to lower average balances of cash equivalents.

Change in fair value of interest rate swaps. For information related to our interest rate swap, see the discussion under "Disclosures of Financial Market Risks" and "Financial Instruments" included in this "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K.